Aesthetics … just a preference or a reason to withhold consent?
The Court of Appeal has recently upheld a decision that a party with the benefit of restrictive covenants can withhold consent to development plans on the basis of aesthetic objections. The interests of leaseholders can also be taken into account.
Holland Park (Management) Ltd (Company) owned the freehold of a large Victorian property in Holland Park that was divided into 5 flats. The owners of the 5 flats owned the shares/were directors of the Company.
In 1965, the then owner of the freehold sold a plot of land at the rear and imposed restrictive covenants prohibiting the plot owner from:
- Applying for planning or other permission without the property owners consent to the plans, drawings or specifications (Planning Covenant).
- Commencing work on the plot without the property owner’s consent to the definitive plans, drawings and specifications of the buildings (Works Covenant).
Sophie Hicks, an architect, applied to the Company for both consents and the Company refused consent under the Planning Covenant due to:
- Architectural design, aesthetics and heritage.
- Destruction of trees.
- Excessive disruption and loss of amenity during works.
- Construction and engineering issues.
She also did not provide definitive materials as required by the Works Covenant
Hicks applied to the High Court, and the High Court found that the Company’s only relevant interest was in the common parts/structure and it could not take into account the interests of the leaseholders. As such, the Company could not refuse consent based on aesthetics or environmental grounds as these had nothing to do with the Company’s interest (i.e. in the structure). The Company could potentially rely on concerns about the structural impact but the concerns were insufficient to justify refusing consent and the High Court found that consent had been unreasonably withheld.
The Company appealed to the Court of Appeal.
The Court of Appeal set aside the High Court decision having considered the following matters:
Can you take into account leaseholders’ interests?
The starting point was to identify the benefitting land. Here the benefiting land was 89 Holland Park meaning the physical entity and not the Company’s interest. Section 78 of the LPA 1925 deems a covenant to be made with the covenantee, the covenantee’s successors in title and persons deriving title under the covenantee. “Successors in title” include owners and occupiers and long leaseholders are owners and occupiers. As such, leaseholders’ interests could be taken into consideration.
Can you withhold consent on aesthetic grounds?
The Planning Covenant required approval of plans, drawings and specifications. One purpose of this is to demonstrate what a development would look like. It was found that it would be extraordinary for the Company to not take into account what a development would look like when considering whether to grant consent. The Company had a legitimate interest in what the development would look like. This was not limited to whether the development could have a detrimental effect on the capital value of the land but also extended to amenity value and whether the development was “out of keeping” and this could in principle be a reasonable ground to object.
It was also held that the Company was capable of making aesthetic judgements. Large corporations spend considerable sums on corporate branding and aesthetics. It would be irrational to suggest otherwise.
This confirms that leaseholders’ interests cannot be ignored if the land they occupy benefits from restrictive covenants. The case also clarifies that aesthetics can be a valid basis for refusing consent to development proposals. This is not carte blanche for a party to withhold consent and there must be something substantive to the objection. However, aesthetic considerations should not be assumed to be a subjective matter only.